The courier, express, and postal industry is the largest segment of the transportation marketplace worldwide. This blog will provide a personal perspective on the challenges faced by firms in the industry as they serve an increasingly competitive market.

Sunday, September 4, 2011

On Tuesday, the Postal Service will be the center of a news storm that will be more powerful than either of the two tropical storms that the National Hurricane Center is following.

The Senate Homeland Security hearing will be held on one of those rare days when there is no other major news story for the cable news channels, network news, and national newspapers to cover.

More than likely, much of the footage for the Postal Service stories if not already in the can, will be completed early Tuesday morning so that it can be edited into the questions and testimony at the hearing. The News Hour on PBS will likely focus its largest portion of its broadcast to include both a summary of the hearing as well as a set of talking heads discussing the legislative options that are now on the table.

Fox News will be looking to book Congressmen Darrell Issa and Dennis Ross, and spokespeople from think-tanks that will frequently use the term "bailout" to describe any proposal other than the one Congressmen Issa and Ross have proposed.

MSNBC will find guests that will discuss the economic impact of laying off 220,000 postal workers as well as the impact on rural communities and citizens on the wrong side of the digital divide. Discussions of the anti-union aspects of certain proposals will also be raised

In blogs from the far right to far left, writers looking for a topic will chose the Postal Service. Most will do little more than repeat the writer's philosophical beliefs and show how the Postal Service's problem fits their understanding of Washington's problems that is no different than what they would say on any other hot political topic.

This orgy of talking points recitation will likely last well past mid-day on Wednesday. Without a major international or financial crisis, the Postal Service will an above the fold story in the morning papers, and a major story in the 7 a.m. hour of all morning news shows. Talk radio will use the Postal Service has a great way to fill up an hour or more of time in most host's 3 hour sifts. The Postal Service could get coverage well into Thursday morning if the Postal Service's problems are raised at the President spokesman's daily briefing on Tuesday or at the Republican Presidential debate Wednesday night.

At the end of the two or three days of being above the fold in both print and broadcast media, Postal stakeholders will be back in the same position they are today, with one exception the Postal Service will be two or three days closer to insolvency. Congress will be no closer to finding either a short-term or long-term solution. Given recent history, even the impending deadline of default will not force Congressional action as the political advantage caused by the Postal Service's default will outweigh the harm caused to the 8% of the economy that is the Postal sector, and to the credibility of the Federal Government as a debtor when one of its largest entitities stops paying some of its bills

14 comments:

Anonymous
said...

Finally (for now), the USPS says 80% of post offices is losing money. That is low. It's more like 92%. The reason is that revenue is credited at the point of entry, so large plants get all the credit, and small offices that actually deliver it DO NOT get the credit for delivering it. The smallest, rural 10,000 post offices cost the $70 Billion dollar organization LESS than $1 Billion per year. If you shut them all down, rural America will suffer unduly.Pensions. Separate issue. Two types, defined benefit and defined contribution. People hired before 1984 are CSRS, and newer hires are under the FERS system. CSRS is pension, with no social security. FERS is smaller pension, social security contributions taken out, and benefits eligible, plus a 401k type instrument called TSP. The CSRS fund is OVER funded by about $50-75 Billion. Depending on if you believe the OIG or PRC. The OPM miscalculated, but won't fully admit it. The FERS fund is OVER funded by about $7.5 Billion. So you can see the USPS has been BAILING out the Federal government for some time now. Any credit for these over payments WOULD NOT be a tax payer bailout, and the funds could go directly to the pre-funding of retiree health benefits, raising THAT fund from the current estimated balance of $40 Billion to the 2016 goal of over $70 Billion, also eliminating the remaining 6 annual paymentsThank you for your article and coverage on the USPS. USPS made $9.5 Billion from 2003-2006 PAEA law passed in 2006 requires Pre-payment to fund for health benefits for future retirees. 10 year plan 2007-2016. About $5.5 Billion required each year. 2007, 2008, and 2010 received FULL payment. 2009 was reduced through H.R. 22 by around $4 Billion for a payment of around $1.4B. Bottom line the losses from 2007-2010 are around $20B, but the prepayments were around $21B, so the USPS is operationally PROFITABLE. Artificial handicap is killing us. No reason to fully fund that account by 2016. That is akin to starving your family to pay off a 30 year mortgage in just 10 years. I am retiring in 2038, so my retired health benefits will NOT be required in 2016.

The situation is dire but this Senator Carper has not gotten a bill out of his subcommittee? Congress needs to do its job, but they are so political now that a Black man is President, noting will get done,. We have had divided government before, but this is ridiculous when it hurts the citizens of America. I say they all have to be voted out because they have failed to do their job and instead are mostly on vacation. It is not racism to criticize the President, but when the effects of your political posturing hurts the citizens, it is no longer political, it is personal and in this case it is RACIST!

The situation is dire only because Congress refuses to operate with any kind of real transparency and intellectual honesty. The PAEA mandated payments and the pension overcharges are at the heart of any financial distress. Everything else, every other aspect of the discussion is political window dressing.The current situation exists because Congress, postal management and those reporting on these issues insist on conflating the political discussion we ought to have about what a postal service ought to be with a manufactured financial crisis.

Congress dances around the truth with scare tactics and false information. The PRC and OPM have all reported that the future retirement funds are over paid and yet Issa and Ross call the repayment a bail out. That couldn't farther from the truth. The USPS is a link to the world that can't be replaced by any business entity and especially not the internet. It is true that the model needs to be updated but the leash on our company needs to be loosed so we can operate as a business and not a piggy bacnk for the country. Our CEO has no governing authority. What other company has to answer to a board of govenors, PRC and Congress and still thrive. We need to get back to the basics of our company- affordable mail service to the world. Enough with the scare tactics......

Can someone answer an easy question? The USPS is asking Congress to assist them in making changes to existing contracts and future bargaining. Why is it that the USPS can offer cash for a buyout but cannot offer 3 or 5 years to an employees career? The USPS would have an exodus of employees if they were to offer years of service to either age or time in. I would bet that most if not all CSRS employees would gladly accept time added instead of taking a penalty for not being old enough or not enough years of service. Just my thoughts.....

the post office made a profit of 260 mill last quarter the theprefunging is killing us. and why if we are going out of business are they hiring new people i think i read that 740 new mechanics were hired because of the work taken back from outside venders

Boiling this whole argument down comes out to two issues. 1st is, led by Republicans, they want to break the unions because they have become far to powerful as a Democratic ally. 2nd, also led by Republicans, is to privitize the Service and let Big Business, i.e. UPS and FedEx, cherry-pick the spoils.

Kudos to the other anonymous poster going into the whole pre-funding requirment, that is the singular reason for the Service not making money.

The post office needs a 15% across the board pay cut. That would take care of the 5.5 billion debt and more. This would also take care of the 100,000 who would retire immediately(less pay for retirement if they stayed). They should allow early retirement for those eligible and if necessary lay off those under 6 years of service(as per contract). Sucka

How about "higher up" USPS Management pay for their health insurance like the rest of us Postal employee's? Its not fair they get it for free. Maybe "cutting jobs" should start at the TOP with management not at the bottom with the real workers, since we are the one's who move the mail. If Saturday delivery goes away why not make routes long enough for 10 hour days and keep the T-6's so we would still have rotating days off along with saturdays too. It would work and who wouldn't mind working four 10hr days?

umm how about they get rid of all the dead beats in the postal service, and whats with the over time, there giving it out like candy,and what about all the FMLA people that abuse the system, This country is clueless, you dont need an education to figure this out, hmm a custodian sleeps 7 hours, works for an hour,pay him over 60 grand a year, well worth it huh,become a 204b and make over a 100 grand a year, well worth it, but screw the hard working person trying to make a living,they want to colaspe it and start over is why there not doing anything

The postal service holds this country together. THE BIG BOYS JUST WANT THE MONEY. BUSH started this by having the USPS pay 5 billion year to a fund called health care. Our current PRESIDENT needs to stop this payment. IF THE USPS FAILS THE U.S.A. Fails...

Drugs, bills, packages, parcels, letters, magazines, newspapers, directed advertising, paper, products, equipmnet manufacturing, installation, maintenance, cleaning, serving the public through bio-terrorism detection, bioterror attack medication delivery, lives saved due directly to the postal carrier; neighborhood watches in all neighborhoods, Lives risked protecting someone elses property, Representing what works with the US government everyday around the world, Processing and delivering love, joy, loss and recovery everyday. Connecting the world. THat is wanat the USPS is and What we the American Postal Worker does everyday of the year. I never saw a boyfried smell the text message or e-mail of his girlfriend. I never taised and electronic cookie when I received my care package. I never held in my hands the hand the excitement of a text or e-mail that said I got the job, or my manyscript was accepted or my application was accepted. The USPS provides so much more than just a service--we provide breathtaking moments of life. What a shame to lose it now.

I keep hearing people say the post office is a business and needs to be more ruthlessly business-like. If that's the case, let's talk about my company car then. And stock options. How about a profit-sharing program. Management gets one..sort of. I want my perks and bonuses and profits like any other soulless corporate-man. Interesting how the post office is cherry-picking some private sector practices and conveniently ignoring the rest. Give me a stake in it's future and i might just give a d--n about its future.

It is truely stated before that the reason that not only these problems exist in the postal servied, but in all other areas (Border fence, 2 undeclared wars, etc) is that the over 535 "representatives of the people" want it that way. There are ways out of all of our messes. Big Money and the lack of Statesmen are the impediments to our success!

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Blog Author

Alan Robinson is the President of the Direct Communications Group and an associate of Analytic Business Services (AnaBus). He has over twenty years experience helping firms and government officials deal with the regulatory, policy, marketing, and management issues associated with changes in competition within transportation, parcel delivery and postal markets.
He can be reached at alan.robinson@directcomgroup.com